Fresno woman's quest to find answers to city of San Joaquin CDBG loan leads to lawsuit

For three years, Delia Montana asked San Joaquin city officials questions about a $47,000 federally-funded loan that the city gave her grandparents in 1994 to renovate their home.

To find answers, Montana has attended San Joaquin City Council meetings, written public records requests and sent emails to council members and city staff about her concerns regarding the city's Community Development Block Grant program that was used to help her grandparents.

In nearly ever instance, Montana said, her public records requests weren't fulfilled, her emails to council members weren't returned, and city staff told her there was little they could do to help her.

Undeterred, she and her lawyers, Robert C. Abrams and Mike Chappars, have filed a lawsuit against the city of San Joaquin, accusing council members and city staff of misusing CDBG funds and failing to monitor and keep good records of a federal program that is designed to help low-income families improve their homes.

They want a Fresno Superior Court judge to order the city to pay for an independent audit of the city's CDBG program, update its tax records on all homes that used CDBG funds, and forgive the CDBG loan the city gave to Montana's grandparents.

San Joaquin City Manager Elizabeth Nunez said Thursday that the city is aware of the lawsuit, but has not yet been legally served with it. Nunez also said the City Council will discuss the lawsuit in closed session at its next regular meeting on July 10. Therefore, it would be inappropriate to comment on pending litigation, she said.

San Joaquin, about 35 miles west of Fresno, is prime candidate for CDBG funds because the program is designed to attack concentrated poverty. San Joaquin has a population of about 4,000 people; nearly half of them —46.3 percent — are living below the poverty level, according to the U.S. Census Bureau.

Montana said her grandparents received the CDBG loan because their annual income from Social Security was about $11,000 a year.

Montana grew up in San Joaquin and graduated from Tranquillity High School in 1989. Now 47 years old, she is a homemaker in Fresno to a husband, a son and three dogs. She has training, however, as a paralegal.

The lawsuit, filed June 13 in Fresno Superior Court, names Montana's 76-year-old aunt, Margarita Gomez Caudillo as the plaintiff because Caudillo inherited her parent's home on Sixth Street after they died. Caudillo also inherited the remaining debt on the original $47,000 loan. Montana is spearheading the lawsuit because she has her aunt's power of attorney.

In her quest to find answers, Montana said she has called and/or written letters to the FBI, the Fresno County District Attorney's Office, the U.S. Department of Housing and Urban Development and the California Department of Housing and Community Development, asking them to investigate. The agencies have replied to her concerns, she said, but none of them made a commitment to her to investigate.

The crux of Montana's complaint is that she has receipts to show her family has made numerous payments over the years on the CDBG loan, but the city has no clue how much the family still owes.

Montana said other residents have told her similar accounts of making payments on a CDBG loan, but still owing money. Because the loans weren't paid, some residents ended up losing their homes.

Montana suspects greed is behind the city not helping her. The lawsuit says it more clearly: "One or more city officials have purchased homes that were foreclosed upon after the homes received CDBG funds."

In addition, the lawsuit says a close friend of Mayor Pro Tem Amarpreet Dhaliwal benefitted from a CDBG loan. Instead of paying for the loan, the city ended up gifting the home to Dhaliwal's friend "because of inconsistencies, confusion and improperly filed and unfiled paperwork," the lawsuit says.

"She's a fighter for justice," said Abrams, a former Fresno deputy city attorney who specializes in real estate law, said of Montana. "This isn't about her," Abrams said, "She's trying to help other residents who are the same predicament."

The lawsuit only gives Abrams' and Montana's view of the facts:

In November 1994, Montana's grandparents -- Benjamin Gomez and Genoveva Gomez -- executed a deed of trust to the city to hold their two-bedroom, one bath home as security until the $47,000 CDBG loan was repaid. The loan was used to add a disabled access to the house, a bedroom and a bathroom with disabled access.

After the work was completed, the contractor was paid, but the city never updated the county tax records to show it was a three-bedroom, two bath home, the lawsuit says. In addition, "the work on the house was done improperly, without proper inspection or permits," the suit says.

After Montana's grandfather died in March 1995 and her grandmother died in December 2000, Caudillo began receiving notices about the unpaid loan, so she started to make payments. But as years passed, Caudillo kept wondering what was the status of the loan since she received no statement or documents to show what was owed, the lawsuit says.

Around September 2015, Caudillo asked Montana to investigate.

The lawsuit says: "The terms of the loan required the city of San Joaquin to monitor the loan and reevaluate it every five years." But the city never did, the lawsuit said. In fact, the lawsuit says "the city of San Joaquin also failed to monitor the status and work of any of the homes that were recipient of CDBG for decades."

Because city officials declined to provide Caudillo documentation about the loan, Montana began to attend council meetings, collect copies of council minutes, and get staff reports about any CDBG loan. She also researched property records and called contractors and others involved in the CDBG program.

In May 2018, Caudillo hired a licensed contractor to examine the portion of her parent's home that was renovated with CDBG funds. The lawsuit says the contractor found several deficiencies involving the electrical wiring, plumbing, the foundation of the added bathroom, the handicapped rails, and the handicapped ramp.

Because the problems remain, Caudillo is seeking unspecified damages from the city. She contends she is unable to properly insure her home. She also has been denied equity in her home because the renovations are not reflected in her tax records, the lawsuit says. In addition, the lawsuit says, Caudillo still owes money to the city "for work that was never done or was completed negligently."

This story was originally published June 24, 2018 at 9:13 AM with the headline "Fresno woman's quest to find answers to city of San Joaquin CDBG loan leads to lawsuit."